The pro-independence Scottish National Party won the most seats on Friday in elections to the Scottish Parliament, narrowly defeating Tony Blair's Labour Party.
Following an overnight vote count marred by technical and other problems, the Scottish Nationalists won 47 seats, compared with Labour's 46. The Conservative Party finished third with 17 seats, while Labour's partner in the outgoing Scottish coalition, the Liberal Democrats, retained 16.
The results mean no party can form a majority government in the 129-seat parliament, leaving the prospect of either a weak minority administration or a coalition government.
It remains uncertain whether the Scottish Nationalists can woo any lawmakers from other parties to form a coalition, or whether the previous Labour-Liberal Democrat combination can return to power.
Scotland has been part of the UK for 300 years. But it has its own legal system and, since 1999, an independent parliament in Edinburgh that legislates on education, health and justice and can alter Britain's national income-tax rates for Scottish residents. London retains primacy on all matters relating to Britain as a whole, including defense, energy and foreign relations.
Scottish Nationalist leader Alex Salmond, who himself won a tough battle in Gordon, northeast Scotland, could become Scotland's "first minister," the senior administration post.
"Scotland has changed for good and for ever. Never again will they say that the Labour Party has the divine right to rule Scotland," Salmond said. "This is a historic election. With verve and imagination, we will serve all of Scotland."
Scotland now faces the prospect of a 2010 referendum on independence from the rest of Britain. That was a major campaign pledge of the Scottish Nationalists, who received backing from Edinburgh-born actor Sean Connery of James Bond fame.
Labour last lost a Scottish election in 1955, and has been the largest party in Scotland's parliament since it was established in 1999 following Labour's general election victory two years earlier.
In the 2003 elections, Labour won 50 seats at Holyrood compared with the Scottish Nationalist Party's 27. This year, SNP gains came largely at the expense of fringe left-wing parties, such as the Scottish Socialists and Greens.
Pro-union parties Labour, the Conservatives and the Liberal Democrats say they have ruled out forming a coalition with the SNP because the nationalists have promised the independence referendum.
"I can't see any of them striking a deal with the nationalists. I think we're heading for a minority, unstable government with Alex Salmond as boss," said Sarah Oates, an expert on Scottish politics at Glasgow University.
"No matter who takes power, they are not going to have the kind of authority you need to rule the country. So they have won the election, but lost the country," she said.
Earlier in London, British Prime Minister Blair said the results were not as bad as predicted for Labour.
"Everyone said we were going to get hammered, it was going to be a rout, and it's not turned out like that," he said. "The fact is we have come from 10 points behind in Scotland to neck and neck."
His view was echoed by Labour's outgoing first minister, Jack McConnell.
"Five weeks ago the pundits were writing us off," McConnell said. "The people of Scotland responded to our call to come out and vote for the future of Scotland."
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